Impact of U.S.-Iran War Will Be Felt by Crop Farmers
Published: Friday, March 20, 2026
The ongoing war with Iran continues its ripple effects around the globe. The shut-down of the Strait of Hormuz has trickled down to every gas station in America as crude oil prices shot higher, even topping $100 per barrel.
HighGround Dairy points out that about 20-25% of the world's seaborne oil trade moves through this waterway and the region produces about 30% of global fertilizer, which is also not moving. "With Northern Hemisphere planting almost underway, prices have moved higher, crimping already tight margins for U.S. crop farmers," HGD warned.
The March 10 Daily Dairy Report stated, "While the war in Iran could alter trade routes and the volumes of U.S. crops used for biofuel production, it's too soon to forecast the direction or scale of the impact. USDA will wait until next month to tweak those assessments."
The Agriculture Department raised its 2026 milk production estimate in last week's World Agricultural Supply and Demand Estimate report, as increases to the dairy cow inventory more than offset slower growth in output per cow.
2026 production and marketings were projected at 234.7 and 233.7 billion pounds, up 200 million pounds on both from a month ago. If realized, both would be up 3 billion pounds, or 1.3%, from 2025.
Imports were raised on a fat basis on additional imports of butter but were unchanged on a skim-solids basis. Exports were raised on a fat basis due to higher shipments of butter and cheese, as well as on a skim-solids basis due to higher shipments of cheese and whey products.
Based on recent price strength, 2026 cheese, butter and nonfat dry milk (NDM) price forecasts were raised, while the whey price forecast was lowered. The Class III milk price forecast was unchanged, with higher cheese prices offsetting lower whey prices. The 2026 Class III average remained at $16.65 per hundredweight, down from $18.01 in 2025 and $18.89 in 2024.
The Class IV price forecast was raised due to the stronger butter and NDM price outlook. The Class IV average was raised to $17.15, up $1.45 from a month ago, and compares to $17.38 in 2025 and $20.75 in 2024.
This month's corn outlook was unchanged relative to last month. The season-average corn price remained at $4.10 per bushel. Global coarse grain production for 2025-26 was forecast 2.7 million tons higher to 1.593 billion.
The foreign coarse grain outlook is for larger production, greater trade and higher ending stocks relative to last month. Foreign corn production is higher as increases for Ukraine and Brazil were partly offset by a decline for Argentina. Ukraine was raised based on the latest information from the State Statistics Service. Brazil was higher on an increase for first crop area. Argentina was lowered as dryness in February reduced yield prospects.
U.S. soybean supply and use projections included increased imports and crush, and unchanged ending stocks. Soybean imports were increased 5 million bushels reflecting trade to date. Crush was raised 5 million bushels, driven by higher soybean meal domestic use. Soybean meal and soybean oil extraction rates were revised. Due to a lower soybean oil extraction rate, soybean oil production was slightly lower than last month despite the higher crush forecast.
Soybean oil domestic use is marginally lower with lower soybean oil for biofuel use mostly offset by higher food, feed and other industrial use. Soybean oil for biofuel use was lowered 800 million pounds to 14 billion and soybean oil ending stocks were revised slightly higher. U.S. ending stocks were unchanged at 350 million bushels. The season-average soybean price was unchanged at $10.20 per bushel. Soybean meal was raised $5 to $300 per short ton.
Looking ahead, CME Class III futures settlements last Thursday had the March contract at $16.16 per hundredweight April was at $16.33; May, $16.85; June, $17.42; July, $17.87; and August, $18.06; with a peak of $18.40 in October.
The USDA's latest weekly slaughter data reported 57,900 dairy cows sent to slaughter the week ending Feb. 28, down 400 from the previous week, but 1,800 head, or 3.2%, more than a year ago. Year to date, 517,900 cows had been culled, up 34,200, or 7.1%, from a year ago.
U.S. dairy exports start 2026 in great fashion, up 11.9% from January 2025 on a milk equivalent basis. Much of the increase is due to the U.S. still having the most competitive prices in the world, particularly on butter and cheese. Strong exports and good consumer demand at home is helping keep product out of the cooler.
U.S. cheese sailings totaled 114 million pounds, up 10.7% from January 2025. HighGround Dairy credits a 24% increase in cheese exports to Mexico and a 45% increase to Australia. January CME block Cheddar saw a low of $1.2850 per pound mid-month, to a high of $1.4450 on Jan. 26.
Butter exports totaled 20.3 million pounds, up 186.9% from a year ago. CME butter traded as low as $1.30 per pound in early January to a high of $1.60 on Jan. 26.
Nonfat-skim milk powder amounted to 122.9 million pounds, up 19.2%. CME powder saw a low of $1.1750 on Jan. 2, to a high of $1.60 on Jan. 26.
HighGround reports that shipments to Mexico were up 6% from a year ago and had a 55% market share, but the bulk of the growth was due to larger shipments to Southeast Asia, the Philippines, Indonesia and Vietnam.
Dry whey exports hit 43.6 million pounds, up 32.8%, highest monthly volume on a 30-day adjusted basis since March 2023, according to HGD. Shipments to China were up 63% and represented 55% of the dry whey exports for the month. CME dry whey saw a low of 70 cents per pound on Jan. 7, with a high of 75 cents on Jan. 28.
Checking the CME, block Cheddar cheese hit $1.63 per pound last Monday, highest price since Nov. 11, 2025, but it dropped quickly from there, and closed at $1.53 per pound on Friday the 13th, 8.75 cents lower on the week, and 16.25 cents below a year ago.
The Cheddar barrels dropped 5.75 cents last Wednesday, falling to $1.5125, but regained 1.75 cents last Friday, to also close at $1.53 per pound, down 4 cents on the week and 16 cents below a year ago. Sales totaled 26 of block and one barrel.
Central region milk output is increasing, reports Dairy Market News, and demand for Class III milk was steady, though some plants were selling milk due to plant downtime. Mid-week prices ranged $5-under to flat class. Cheesemakers were running busy schedules, though some were down for maintenance. Contacts say interest is strong from retail cheese customers while food service demand remains down from a year ago. Export demand is strong, but contacts are concerned that rising shipping costs will negatively impact international interest.
Cheese manufacturers in the West were receiving plenty of milk and running heavy schedules. Class III spot milk demand was moderate. Spot cheese availability was mixed depending on producer contractual commitments and type. Stakeholders convey mozzarella loads are tighter. Domestic demand varies from lighter to somewhat stronger. Sellers indicate retail sales are stronger than food service sales. Global disruptions have brought some delivery challenges, says DMN, but demand from international buyers is mostly steady.
After skyrocketing the previous week, hitting $2.1375 per pound but then reversing, cash butter closed last week at $1.8475, down 16.25 cents on the week, and 49.50 cents below a year ago. There were 75 CME sales on the week.
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